Royal Mail

My Lords, I join my colleagues in congratulating my noble friend on securing this debate. Indeed, it is welcome that it is he who introduced it, given his long experience of the postal services. However, it is unfortunate that we are probably going to end up debating both postal services and post offices. It might have been better if we had been able to separate the two, and I want to devote most of my time to the postal services. Since 1997 the Government have adopted a novel and pragmatic approach. It was imaginative to establish the Royal Mail or Consignia—the names are almost interchangeable but I think that noble Lords know what I am talking about—as a company with the Government as the main shareholder. There were public service requirements, which were going to be overseen by a regulator, and, since then, the Euro directive has been introduced. It should also be made clear that it takes a certain level of incompetence by management to run a monopoly at a loss in a capitalist society. That was basically the story of the Post Office. It made surpluses perhaps two or three years out of every four. There may have been some sleight of hand, with a bit taken back by the Treasury, but the fact is that there was a record of doubtful management competence, financial carelessness, a failure to realise assets that were no longer necessary to the business and a failure to invest in the business. Not that long ago, there were no machines available in the postal services in Britain to sort A4 envelopes. From the volume of business that we get, we know the number of envelopes that come in that size. No one in the Post Office had woken up to this change in the size of envelopes, in much the same way as they missed out on the opportunity of Internet service providers and, for that matter, emergency or very fast mail delivery services. Even now, the range of products offered by the Royal Mail is woefully narrow. Indeed, if an individual retailer at a post office were to be dependent solely on the services provided by the Royal Mail, he would make virtually no money at all. So I think that, on the one hand, we have to strip away a lot of the cosy nonsense that surrounds the Post Office case and, at the same time, recognise that it is a vital part of our economy on which we are dependent for a number of services, both economic and social. At the same time, however, we have to recognise that the Euro directive is something with which we have to live. Liberalisation will be a fact, and it is a question of when it is introduced. I take the view that the sooner liberalisation is introduced in a realistic way, the better because, more than anything else, that will be the stimulus to the sclerotic levels of management that still prevail in large parts of our postal services. The fact is that, as my noble friend said, most of the mail will be collected by the postal services at a charge—a charge agreed, albeit reluctantly but none the less agreed, after long negotiations by the Royal Mail. Equally, the last-mile delivery will still be the responsibility of the postal services, and it is the sorting processes in the middle which are the most vulnerable. Those are the ones—the inside jobs, as they used to be known—where, frankly, most needs to be done. It may be argued that foreign companies with deep pockets are able to invest in that area of sorting and activities of that nature and that they might be able to provide cheaper and better postal services. The passage of two or three years, which is what we would have saved had the postal directive not been introduced in the way that it was, probably would not have made very much difference because of the glacial speed at which areas of postal management move. They need—to use Corporal Jones’s colourful expression—““a touch of the cold steel””, and they need it sooner rather than later. I disagree with my colleagues on that, and remember over the years the regulated industries—particularly regulated monopolies—crying ““foul”” whenever a regulator chose to do something. I well remember the British Gas management behaving in exactly the same way as Mr Leighton and his colleagues when change was introduced at a more rapid speed than was anticipated or which the management felt comfortable with. In many respects what we are seeing in the Post Office is what we saw in the other utilities when they were confronted with change. The challenges that the Post Office management will have to address will not be blurred by issues of share ownership and the like. Those are irrelevancies. Let us face it—I return to my earlier point—it takes a particular type of skill to have a monopoly, run it at a loss and have staff who are poorly paid. One of the major challenges is to increase the pay and improve the conditions of postal workers, and we must improve their pension arrangements. A publicly owned Post Office can enjoy a certain privileged position on pensions. I hope that we can move towards enhancing the depleted funds of the pension scheme fairly quickly. While in some parts of the country far too many postal jobs are casual, in the area that I was privileged to represent in another place, postal jobs were important jobs. They were comparatively well paid and seen as jobs for life. Even though the wages were not brilliant—the area that I represented had fairly low levels of pay—there was always the promise of the index-linked final salary pension scheme that kept many people in the job and attracted many of the loyal workers who put in 30 to 40 years of service. I am referring to the town of Alloa, which is about 40 miles from Edinburgh. In Edinburgh turnover in the postal service is very high because unemployment is very low. We have challenges to meet. It is not a seamless labour market across the whole of the postal service, but it is a seamless service in so far as we have universal obligations of service and price. I should like to think that the task is not beyond the capabilities of the management and unions. It is amazing what has been achieved in a relatively short period in a number of areas, which gives me a degree of confidence and optimism, which some of my colleagues have yet to display. I hope that the Minister can reassure us when he responds to the debate.